by News Service of Florida
Citizens Property Insurance, the state-backed company and largest property insurer in Florida, has enough in reserves and reinsurance coverage to pay claims unless there’s a 1-in-50 year hurricane like Andrew or a season with multiple major hurricanes like 2004, a Citizens official told Gov. Rick Scott and the Cabinet last month.
Citizens Executive Vice President Susanne Murphy told Cabinet members that the company has about $10 billion in reserves for its coastal wind-only accounts and another $5.6 billion for other accounts, though that includes about $3 billion in liquidity from bond sales that would have to be paid back.
A 1-in-5 year hurricane could be handled just with Citizens’ current surplus, and a 1-in-25 year storm that causes $8 billion in damage could be paid for with the company’s surplus and its reinsurance through the state Hurricane Catastrophe Fund.
If a major storm like Andrew hit, however, it would mean assessments on all Florida policy holders, though Murphy reminded the Cabinet that the law has changed so Citizens policy holders would bear the largest share of that cost as well.
Citizens policy holders could now be assessed a fee equal to 15 percent of their premium for each of the company’s three accounts that’s in deficit – meaning a possible 45 percent hit if there’s a large storm the company can’t pay claims on.
People insured by the private market could see assessments of up to 6 percent of their premium for each account. The assessed amount would vary depending on how long state officials stretch the payments out with the possibility that a large assessment might be charged over decades to keep the annual amount lower.